Co-founder/CEO of Indicina, Yvonne Johnson, asserts that customer education can help build trust amongst lenders and bridge the credit gap on the continent.
Access to credit is rife with challenges in many parts of Africa. While fintechs have built credit solutions to bridge the credit gap, challenges still remain: many lenders buck at loan repayments. Yvonne Johnson, Co-founder/CEO of Indicina believes that the right customer education can help bridge this gap and build trust among borrowers and creditors.
She made this observation while speaking on building trust among lenders at Moonshot, a flagship conference by TechCabal, which has gathered players and builders in the African tech space to network, collaborate, share insights, and celebrate innovation on the continent.
Johnson is of the opinion that many Africans do not properly understand credit solutions which is a result of the financial literacy gap in the continent. African countries score the worst in terms of financial literacy in the world. Data from the S&P’s Global Financial Literacy survey suggest that financial literacy levels on the continent are lesser when compared to European counterparts. South Africa and Nigeria both have financial literacy levels of 42% and 26% while European countries have a range of 65%–75%.
While access to credit is rife with challenges, it remains an important arsenal for every economy. Being able to borrow money at affordable interest rates is how households can build wealth, take advantage of opportunities, and take a bet on a business idea.
While SMEs take on loans to fund their businesses, Daniel Osineye, founder/CTO, Evolve Credit, suggested that credit solutions should be designed in a way that considers the business. “Don’t give out loans and expect the user to pay back in an unreasonable time frame. You have to be able to match the repayment circle of your business with the technology; you have to put them in the loop,” he said.
Johnson echoed Osineye’s sentiment. According to her, lenders should try not to give out predatory loans. While concluding the panel session, Dayo Ademola, managing director, Branch Nigeria, asserts that credit remains the most important piece of the financial ecosystem.